Irish real estate undergoes dramatic re-pricing - IPD

The commercial real estate sector has undergone a rapid re-pricing as the market continues to falter. Year-to-date total returns now stand at -21.2%,
wiping out gains accrued since the third quarter of 2006, according to the Investment Property Databank.

The SCS/IPD Irish Quarterly Property Index shows total returns fell 13.9% quarter-on-quarter over the three months to end-September this year, eclipsing what the IPD described as the record quarterly returns fall posted the previous quarter.

All-Property yields contracted for the fourth consecutive quarter. Over the three months to 30 September, the detraction was -15.4%, forcing down the three-year annualised yield impact into negative territory, at -2%, compared with 4.4% at the end of of the second quarter. All-Property equivalent yields, which compare investment valuations across different market segments in any one year, have risen to their highest level since the first quarter of 2005.

IPD said total returns on the All-Retail index fell by -17.3%, owing to a -18.1% decline in capital growth for the sector. The scale of the quarterly losses has pushed down the three-year annualised total returns to 3.8%, compared to 12.6% for the equivalent figure for the end of June.

Capital values for Offices fell by 13% and for Industrials by 10.1%.

IPD Head of Indices Angela Sheahan said: 'These numbers confirm the losses expected by the market for several months. This dramatic period of property repricing has been underway for some time, predicated by a widening gulf between investor confidence and real estate fundamentals.'